St. Petersburg International Economic Forum 2021: Highlights and Analysis

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  • Putin’s Views On United States & Biden / Visa Free Vaccine Tourism / Tesla in Russia / Russia-China Trade / Total De-Dollarization / Greening the Economy / Pakistan Gas Stream / Sukhoi Superjet Deliveries / Joint Russian-Japanese Medical Clinics / Putin’s Plenary Speech  

Op/Ed by Chris Devonshire-Ellis  

St. Petersburg has hosted the first global economic forum since the pandemic began, with the St Petersburg International Economic Forum (SPIEF) concluding this past weekend. We summarize the major points as follows:  

Russia May Provide Covid Vaccinations For Incoming Foreigners Without Need For A Visa  

Russia may provide coronavirus vaccinations for a fee to foreigners who travel to the country, President Vladimir Putin said on Friday, as Moscow seeks to enhance its global reputation with its Sputnik V vaccine. Putin said many people are coming to Russia to get a shot. “I am asking the government to study this issue in full by the end of the month, to establish conditions for foreign citizens to get vaccinated in our country for a fee.” The Russian vaccine has been approved by 66 nations and is under review both by the World Health Organization and the European Medicines Agency (EMA). Approval by the latter agency is required for use in the European Union. 

Russia-China Bilateral Trade May Reach US$200 billion by 2024, EAEU-Belt & Road Cooperation 

Russia and China managed to keep bilateral trade at a level of US$100 billion in 2020, despite the pandemic, and may reach a level of US$200 billion US dollars by 2024, Russian President Vladimir Putin said on Friday. “One of the key areas is economic cooperation. Several years ago, we with China’s President Xi Jinping set a task of reaching a US$100 billion level in our trade,” he said at a meeting with CEOs of global news agencies organized by TASS. “We have reached this level. Moreover, we managed to maintain it in the difficult conditions of the pandemic 2020 year. We did have a slight decline in trade but nevertheless it reached US$104 billion. “I think that despite this slight decline we will be able to attain the level of US$200 billion by 2024, as we agreed.”  

Putin stressed that Russia and China had a lot of coinciding interests and bilateral relations were based on that. Moscow and Beijing, in his words, cooperate in various spheres, focusing of high technology areas and nuclear power engineering. “We continue to work together in the aircraft building sector. We pay more and more attention to the development of our cooperation in outer space, including on a lunar program. We have very promising perspectives in this sphere. And we develop infrastructure to support that. Not long ago, a bridge crossing was opened at one of the most important sections of the Russian-Chinese border.”  

The Russian president stressed that China’s Belt & Road Initiative was being linked with what was being done within the Eurasian Economic Union. “I have never doubted for a minute that we will continue to cooperate actively. I mean both Russia’s and China’s interest in maintaining our cooperation on the international arena and this cooperation is obviously a major element of stability in international affairs.”  

Russian National Wealth Fund To Decrease US Dollar Holdings To Zero And Increase Chinese Yuan Holdings By 30%  

The Russian Ministry of Finance will introduce changes to the structure of the National Wealth Fund within a month, as the share of the US dollar will decrease to zero and the share of yuan will grow to 30 percent, according to Anton Siluanov, the Russian Minister of Finance, who stated. “Just as the Russian Central Bank has done, we made a decision to abandon the dollar assets completely and to increase the share of euros and gold instead. The share of US dollars will amount to zero, Euros – 40%, Chinese Yuan – 30%, Gold – 20%, and the British Pound and Japanese Yen – 5% each.”  

American investment expert Jim Rogers, also speaking at the event, stated that countries around the world are having to diversify more, as Washington is using the dollar to put political and economic pressure on its rivals. “I hate to say it, but the American dollar has political problems because if America gets angry at you, they use sanctions, they say you cannot use it. But the international currency is supposed to be neutral.” Rogers said that the US has the largest external debt in the world, adding that this is “not good if you have the international currency, and has resulted in a search for an alternative. “People are looking for a change, and I can certainly understand why the Russians would start to diversify more and more; you just have to diversify and have a plan B.”  

Russian Economic Rebound, Move Towards A Green Economy  

Russian Minister of Economic Development Maxim Reshetnikov expects that the Russian economy will be restored to the pre-Covid level of the fourth quarter of 2019 within the next two months. Russian Presidential Aide Maxim Oreshkin noted that the COVID-19 crisis deepened the inequality between countries and the population inside them while noting that the world was passing the peak of this inequality now, and in the future economic policy would swing to the left. The government is expected to spend more on the social sector, environment, and infrastructure. In turn, the head of Russia’s Accounts Chamber, Alexei Kudrin, noted that in the future basic income payouts would become a reality for Russia. Finance Minister Anton Siluanov stressed the importance of stepping up spending on infrastructure, noting that this would stimulate Russia’s economic growth. He also spotlighted the major shift towards a “green economy,” suggesting that due to this factor, global oil demand might not be restored to the 2019 levels. 

Pakistan Gas Stream To Be Completed By 2025 

Construction works on the Pakistan Stream gas pipeline project will be completed as early as 2025 with sustained financing, according to Russian Energy Minister Nikolay Shulginov. “If it goes well with funding issues, we expect the project to be fully implemented in 2025.” Shulginov said that Russian companies oversee the construction of the pipeline, while their Pakistani partners are responsible for the gas and for building a regasification terminal.  

At the end of last month, the two countries signed a deal on building a major gas pipeline linking the Pakistani southern ports of Karachi and Gwadar, to power plants and industrial hubs in Pakistan’s northern region of Punjab. 

Spanning over 1,100 km, the pipeline is expected to have a discharge capacity of up to 12.4 billion cubic meters of natural gas per year, according to the Russian Energy Ministry. 

Under the terms of the agreement, Pakistan holds a 74% stake in the pipeline operator while Russia will own the remaining 26%. The project is the largest infrastructure deal between the two nations since the early 1970s.  

Joint Russian Japanese Medical Clinics Planned Along Russian Railway Routes  

Russian Railways plans to create centers for preventive medicine across Russia based on a Joint Venture with Japan’s Marubeni Corporation, First Deputy Chief Executive Officer of the railway operator Sergei Pavlov stated. “We plan to develop similar medical centers all across Russian railways on the basis of this startup.”  Russian Railways and Marubeni Corporation have set up a joint company, R&M Medical Center LLC registered in Khabarovsk in Russia’s Far East to create a Russian Japanese center for preventive medicine and diagnostics. The project involves the creation of a high-tech medical center using Japanese technology, admission methods and patient diagnosis in all categories, including patients under the compulsory medical insurance program. The total investment in the project exceeded US$13.7 million.  

New Russian Superjet Deliveries  

Russia’s United Aircraft Corporation (UAC) plans to deliver over 30 SSJ100 (Sukhoi Superjet 100) passenger jets in 2021, Russian Deputy Prime Minister Yuri Borisov said. “About 200 aircraft of this brand are already flying and this year’s plans include the delivery of about 33 Superjet aircraft to our airlines.” Borisov added that part of the deliveries would fall to Aurora, the Russian Far East Air Carrier. 

Tesla EV Manufacturing In Russia  

Russian regions can offer their sites for localizing production of electric vehicles in Russia, in particular Tesla, Russian Deputy Prime Minister Yury Borisov said at the St. Petersburg International Economic Forum. 

“Regarding the proposal of Elon Musk, it seems to me that we should always consider the most interesting, high-tech solutions. Why not? We always welcome localizing production and advanced technologies in Russia. Whether it is Elon Musk or another manufacturer of electric vehicles, we are always happy and open for cooperation. A very large number of Russian regions can offer their sites.” Earlier, Musk said that Tesla could soon enter the Russian market, are develop its own production facilities in the country. After that, the Russian Ministry of Industry and Trade invited Musk to discuss his idea. At the same time, several Russian regions have publicly offered Musk production sites on their territory. 

Investment Deals of US$52.22 billion Signed  

Participants of the St. Petersburg International Economic Forum (SPIEF) have signed more than 800 agreements worth over 3.8 trillion rubles (US$52.22 billion), Adviser to the Russian President, Executive Secretary of the SPIEF Organizing Committee Anton Kobyakov said on Saturday. “Businessmen from all over the world, Russian businessmen have signed more than 800 agreements at this forum. The total amount of agreements is 3.86 trillion rubles,” he said. 

Over 160 agreements were inked in socio-economic and interregional cooperation, more than 110 agreements in high tech, about 80 in the banking sector and about 50 agreements were concluded in the education and science sectors.  

Putin On Meeting With US President Biden and US Future  

Russian President Vladimir Putin stated of his upcoming meeting with US President Biden in Geneva that “I do not expect any breakthroughs as a result of that meeting. But I think that in spite of contradictions – but they have not been created by Russia, I would like to mention that – we still have overlapping interests. I proceed from the fact that President Biden is a very experienced politician. He has been in politics for almost his whole life. Therefore, I hope that our meeting will be constructive.”  

Putin then commented about the overall US position: “The problem of empires is that they think they are so powerful that they can afford small inaccuracies and mistakes. But their problems keep piling up. And, at some point, they are no longer able to cope with them. And the United States is now walking the Soviet Union’s path, and its gait is confident and steady.”  

A full video of Putin’s speech at the plenary session of SPIEF 2021 can be viewed (in Russian) here.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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